The protracted global economic downturn has had a negative impact on job security around the world. South Africa is no exception, and hardworking citizens of this country no longer enjoy the certainty of a job for life that previous generations may have experienced.

According to Nicholas van der Nest, Divisional Director for Risk Products at Liberty, while some employers offer limited income protection cover for their employees, employers generally cannot make provision for retrenchment cover.

“Employers generally cannot offer retrenchment cover to their employees, as retrenchment decisions will be made by the company’s executives, thereby implying that the company has a direct influence on whether there will be a claim under their policy or not,” van der Nest explains. “This is why it is imperative that all working South Africans take responsibility for protecting themselves and their families in the unfortunate event that they lose their jobs.”

According to van der Nest, the latest improvements to Liberty’s Retrenchment Protector benefit are aimed at making it easier for South African employees to achieve adequate levels of protection. The company has announced that, with effect from 26 May 2012, Liberty’s Retrenchment Protector benefit will be made available as an optional ancillary benefit to all existing Liberty Lifestyle Protector policies with life cover benefits, subject to certain benefit and qualification rules.

Previously, the Retrenchment Protector benefit was only available to Liberty clients who held Income Protection policies, but van der Nest explains that Liberty’s recognition of the continued high retrenchment rates in South Africa, and the massive negative impact that losing a job can have on entire families, led it to extend the availability of this valuable benefit to a greater numbers of its clients.

“Recent figures released by the Unemployment Insurance Fund showed that retrenchments continue to be a harsh reality for many thousands of South Africans,” he explains,” and while most of these retrenched individuals will receive some help from the state’s unemployment insurance programme, this is very rarely enough to see them and their families through the three to six months, or more, of unemployment that most will face.”

Van der Nest also points to the correlation between companies going out of business and retrenchments as further evidence for the need of working South Africans to protect themselves against the financial consequences of losing their jobs.

“According to Statistics SA, while total liquidations declined between 2010 and 2011 the number of liquidations amongst South African companies in the fourth quarter of 2011 actually increased by 2.1% compared to the same period in 2010,” he explains, “which means that the South African working environment is still very volatile and employees need to be proactive in safeguarding their incomes.”

Importantly, the Liberty Retrenchment Protector benefit is very affordable with policyholders paying just R90 per R10 000 worth of monthly retrenchment protection cover. Van der Nest is adamant that, given Liberty’s proven reputation for reliable and prompt claims payments, this is a very small price to pay for excellent financial peace of mind. “Liberty’s long term success as a financial service provider has largely been built on our excellent risk claims payment record,” he says, “which saw almost R2.6 billion in claims settled in 2011, R327.3 million of which was for loss of income claims.”

According to van der Nest, if affordability is a concern and the full monthly income cannot be protected, policyholders should definitely consider at least some form of protection to pay those non-negotiable bills such as the mortgage, children’s school fees and living expenses.

To further benefit existing Lifestyle Protector policyholders, the Retrenchment Protector benefit can now also be purchased at any time during the lifetime of their contract.

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Mortgage-Protection Insurance:

Insurance that decreases in amount periodically (usually yearly). It may either expire completely after a term of years or remain level thereafter at a reduced amount. The decreases in amount follow the principal-reduction pattern of a monthly reducing mortgage loan, and the insurance is primarily intended to pay off the unpaid balance of such a loan in the event of the death of the insured.